Semtech (NASDAQ:SMTC) posted stronger-than-expected third-quarter results on Monday, though the upbeat earnings failed to lift investor sentiment, with shares sliding 6% in after-hours trading.
For the quarter ended October 26, the chipmaker delivered adjusted earnings of $0.48 per share on revenue of $267 million. Both figures came in just ahead of analysts’ forecasts, which called for $0.45 per share in adjusted profit and $266.4 million in sales.
Looking ahead, Semtech expects adjusted earnings of roughly $0.43 per share at the midpoint of guidance for the current quarter, with revenue projected to reach $273 million. Wall Street had anticipated $0.44 per share and $265.9 million, respectively.
Analysts at Stifel said the company appears to be tightening its strategic focus, devoting capital and R&D more heavily toward its data center, industrial IoT, and high-end consumer segments.
They noted that by doubling down on these higher-growth businesses — and potentially exiting its lower-margin Canadian wireless communications unit — “we believe Semtech is enriching its operating model, resulting in a streamlined product portfolio levered towards secular trends including artificial intelligence infrastructure, industrial automation, and advanced consumer connectivity.”